Northwest Airlines

Paper Summary:

This paper evaluates Northwest Airlines' ability to survive its financial crisis, despite deregulation and the aftermath of 9/11. The paper gives a history of the airline deregulation process, highlighting what was expected of the process and what actually happened. The author then focuses on Northwest's survival despite its mistakes to customers. The author concludes that despite Northwest's current bankruptcy filing, Northwest should be able to survive.

From the Paper:

"More recently, the fortunes of Northwest Airlines have declined: "In September 2005, in an industry plagued by debt and rising oil prices, Northwest filed for Chapter 11 bankruptcy protection, reporting debts of some $17 billion. The company vowed to continue operations while it restructured" (Northwest Airlines Corporation, 2006, para. 1). Among the reasons given for this problem were a deepening economic recession, an increase in oil prices, and a strike by Northwest mechanics. The airline had tried to forestall such an eventuality by cutting $1 billion in labor costs, demanding some $35 million in pay, benefit, and job cuts from its nonunion workers. The airline then asked the labor unions for more concessions."

Sample of Sources Used:

• Castro, Janice, 'Get 'Em While They Last," Time (July 22, 1991), p. 49.
• Form 8-K for Northwest Airlines Corp. (2006). Yahoo Finance. Retrieved December 10, 2006 from http://biz.yahoo.com/e/061130/nwacq.pk8-k.html.
• Meyer, John R., Clinton V. Oster, Jr., Ivor P. Morgan, Benjamin A. Berman, Diana L. Strassman. Airline Deregulation: The Early Experience. Boston, Mass.: Auburn House, 1981.
• Morrison, S. & Winston, C. (1986). The Economic Effects of Airline Deregulation. Washington, D.C.: The Brookings Institution.
• Moylan, M. (2005, September 13). Northwest's strengths should help it survive. Duluth News Tribune . Retrieved December 11, 1006 from http://www.highbeam.com/doc/1K1-121f0a0000057647.html.

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